Archive for July, 2006

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Kim Cheak Iron and Steel Complex operations suspended

Tuesday, July 11th, 2006

From the Daily NK:

Workers secretively selling iron pigs in order to live

It has been discovered, that the most of Kim Cheak Iron and Steel Complex Operations in Chongjin, North Korea are in a crisis of suspension.

In a recent newsletter, Good Friends, a support organization for North Korea explained that “Equipment had severely deteriorated and original resources such as coal and coxtan are not supplied.”

As a result the rationing, workers meagerly received was ceased and living conditions became even harder.

Kim Cheak Iron and Steel Complex Operations has approximately 50,000 workers and is a special complex where people are stationed for 3 months for discipline and reform. However as factory operations decline, a situation is occurring where most of the workers steal the iron pigs and sell them for a living.

Men cannot really come forward to do this work and so wives are taking direct action. In order to obtain the iron pigs, a river in front of the complex 100m in width, must be crossed numerously throughout the night.

The newsletter reported that the iron pigs sell for 200~240won per 1kg, and if you are having a lucky day and obtain 80kg, an income of about 16,000~20,000won($5.3~6.7) can be earned in one night.

If protection or inspection officers are bribed, more iron pigs can be acquired by transporting them by bicycle. But, even if you manage to cross the dangerous river at high tide it is easy for other protection or inspection officers to catch you.

The newsletter reported that if a person is caught 1~2 times, the penalty is a fine and if caught more than 2~3 times, forceful punishment in addition to a fine is given. However, it is unlikely that this larcenous act will stop as selling stolen iron pigs is a way of earning money, even if one is caught and has to pay a fine.

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DPRK officials to get econ 101 in Switzerland

Tuesday, July 11th, 2006

From the Korea Times:

A group of North Korean officials will receive training on multilateral diplomacy and market economy in Switzerland this summer, a Swiss research institute said Tuesday.

The North Koreans, whose number was not immediately known, are slated to enroll for the training from Aug. 21 to Sept. 22 at the Geneva-based Center for Applied Studies in International Negotiations, center officials said.

The Swiss think-tank, founded in 1979, has been running a short-term training course for North Korean officials every year since 1997. Its program is financed by the Swiss Agency for Development and Cooperation, a governmental body which last year earmarked 5 million franc ($3.1 million) to help North Korea.

In 2004, 14 North Korean officials benefited from the center’s program.

During their stay in Switzerland, they visited the European Union, headquartered in the Brussels, Belgium, and met with members of the European Parliament in Strasbourg, France.

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Summary of current and proposed trade sanctions on DPRK

Tuesday, July 11th, 2006

From the Korea Times:

You may be surprised to hear that North Korea is either in violation, or the target, of more than 13 U.S. laws, which include laws dealing with transfer of missile technology to other countries and human rights issues. Three of these laws, however, have direct bearing on U.S. economic sanctions against North Korea.

The first is the U.S. Export Control Act of 1949 that became the basis for the U.S. invoking a total embargo against North Korea on June 28, 1950, only three days after North Korea invaded South Korea. The second is the Trade Agreement Extension Act of 1951 that was the basis for banning the most favored nation (MFN) tariffs on North Korea’s exports to the United States. As you know, all member countries of the World Trade Organization have to abide by the MFN regulation that requires these nations to levy the same low tariffs to all member nations of the WTO. Without MFN, there is no way for North Korea to export anything to the U.S. because higher tariffs make them impossible to compete. The MFN is so widely spread that it is now known as the normal trade relation (NTR). North Korea was denied MFN tariff status on September 1, 1951.

The third is the Export Administration Act of 1979 that allowed North Korea to be branded as a terrorist state when its agents blew up KAL 007 on November 19, 1987. At the time of the explosion, Korean Air Lines 007 was in flight from Bagdad (Iraq) to Bankok (Thailand). The explosion killed 115 passengers and crew. On January 20, 1988, North Korea was placed on the list of countries supporting international terrorism.

Placement on the list made it impossible for North Korea to borrow development funds from international financial institutions such as the World Bank and the International Monetary Fund.

On May 25-28, 1999, former U.S. Defense Secretary William Perry visited North Korea and delivered a U.S. proposal. On September 13, 1999, North Korea responded positively by pledging to freeze long-range missile tests. On September 17, 1999, President Clinton agreed to the first significant easing of economic sanctions against North Korea since the end of the Korean War in 1953 by announcing the lifting of most export restrictions applied to North Korea in response to North Korea’s willingness to cease long-range missile testing.

Details of eased U.S. economic sanctions on North Korea were announced on June 19, 2000. Key provisions included that the ban on exports to North Korea had ended, that U.S. passports were valid for travel to North Korea, and that U.S. travel service providers were authorized to organize group tours to North Korea. Among the notable U.S. sanctions that were not lifted are the denial of MFN status and the placement on the list of countries supporting international terrorism.

You may wonder what more economic sanctions can be levied against North Korea beyond the three already in place. To answer this question, you need to know the extent of North Korea’s foreign trade.

Contrary to what you may have heard or believe, latest United Nations trade data indicate that North Korea has trade relations of imports, exports or both with no less than 108 countries, which exclude South Korea because inter-Korean trade is not recorded as trade data in the U.S. trade database. North Korea’s major trading partners in 2004 were, in order of the amount, China ($585,651,972), Japan (164,101,115), Germany ($100,739,000), Brazil ($73,412,125), and Mexico ($47,662,978) for exports, and China ($799,450,316), Russia ($204,818,560), Brazil ($169,921,763), India ($121,080,999), and Netherlands ($120,525,232) for imports. The total amount of North Korea’s exports for 2004 was $1,256,533,361, while the total amount of North Korea’s imports for the same year was $1,937,738,240, with the trade deficit of $681,204,879, representing no less than 54.2 percent of total exports.

Now you have an idea. The new economic sanctions may take the form of a multi-national ban of trade with North Korea. The new economic sanctions may also include a complete ban of any transfer of money to North Korea from many Koreans who live in Japan and support North Korea.

There is no doubt that a complete ban of North Korea’s foreign trade, if imposed, would easily lower the current North Korean GNP to the 1999 level when hundreds of thousands, if not millions, of North Koreans starved to death.

In view of the large number of countries engaged in trade with North Korea, it would be impossible to impose a complete ban on North Korea’s foreign trade without naval blockade, which may escalate tensions on the Korean peninsula so rapidly that China and South Korea may not be willing to go along with multilateral economic sanctions.

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Posted in China, Chongryun, EU, International Aid, International trade, Japan, Russia, South Korea, USA | Comments Closed

Japanese tax authorities crack down on DPRK aid

Tuesday, July 11th, 2006

From the Donga:

The Japanese media reported on July 10 that the Japanese prosecutors and taxation authorities raided a private organization providing humanitarian assistance to North Korea and a construction company supporting the aid group.

The Tokyo District Public Prosecutors’ Office and the National Tax Agency searched an office of “Rainbow Bridge,” a private group in Tokyo.

The group was established to provide North Koreans with clothes, food, trucks and power generators free of charge in April, 2000. In 2003, the secretary-general of the group drew attention after he visited the Stalinist country, met six offspring of abducted Japanese citizens, and brought and gave their photos and letters to their parents who had arrived in Japan.

The search was reportedly part of an investigation into Mizutani, a construction company on suspicion of tax evasion.

With regard to reasons to support Rainbow Bridge, Mizutani explained to the investigation authorities they considered it as an investment needed to prepare business in North Korea.

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What is the DPRK-China realtionship

Tuesday, July 11th, 2006

An interesting strategic analysis fo the DPRK/PRC realtionship in a regional competition context.  From the Council on Foreign Relations:

Introduction
China and North Korea have been allies for more than half a century. Beijing is a key provider of food and fuel to Kim Jung-Il’s regime, and it is heavily invested in preventing a destabilizing regime collapse that would send North Korean refugees flooding across its northeastern border. But as Kim tests ballistic missiles and develops his nation’s nuclear weapons capacity, China may be rethinking its support.

How strong is the current relationship between North Korea and China?
China has supported North Korea since Chinese fighters flooded onto the Korean peninsula to fight for the Communist Democratic People’s Republic of Korea (DPRK) in 1950. Since the Korean War divided the peninsula between the North and South, China has given both political and economic backing to North Korea’s leaders: Kim Il Sung, and his son and successor, Kim Jung-Il. In recent years, China has been seen as one of the authoritarian regime’s few allies.

On July 4, North Korea test-fired a series of ballistic missiles despite explicit warnings from Beijing, Tokyo, and Washington. This led to an unusually public rebuke from Chinese officials, a sign of strain in the relationship. Despite their long alliance, experts say Beijing cannot control Pyongyang. “In general, Americans tend to overestimate the influence China has over North Korea,” says Daniel Pinkston, a Korea specialist and director of the East Asia nonproliferation program at the Center for Nonproliferation Studies in Monterey, California. At the same time, China has too much invested in North Korea to halt or withdraw its support entirely. “The idea that the Chinese would turn their backs on the North Koreans is clearly wrong,” says Adam Segal, the Maurice R. Greenberg senior fellow for China studies at the Council on Foreign Relations.

How does North Korea benefit from the relationship?
Pyongyang is economically dependent on China, which provides most of its food and energy supplies. North Korea gets about 70 percent of its food and 70 to 80 percent of its fuel from China. Beijing is Pyongyang’s largest trading partner, and an estimated 300,000 North Koreans live in China, many of them migrant workers who send much-needed remittances back home.

China is also a strong political ally. “As an authoritarian regime that reformed, they understand what Kim Jung-Il is most concerned with—survival,” Segal says. China has repeatedly blocked UN Security Council resolutions against North Korea, including some threatening sanctions. China has also hosted the Six-Party Talks, a series of meetings in which North Korea, South Korea, Japan, China, Russia, and the United States have tried to resolve the security concerns associated with North Korea’s nuclear weapons program. There and in other international forums, China is seen as a buffer between North Korea and the United States and Japan, which favor punitive sanctions and other measures to prevent Pyongyang from gaining nuclear weapons.

How does China benefit?
China’s support for Pyongyang ensures a stable nation on its northeastern border, as well as providing a buffer zone between China and democratic South Korea. North Korea’s allegiance is also important for China as a bulwark against U.S. military dominance of the region and the rise of Japan’s military. And China gains economically from its association with North Korea; growing numbers of Chinese firms are investing in North Korea and gaining concessions like preferable trading terms and port operations. Chinese trade and investment in North Korea now totals $2 billion per year. “They’re becoming a stakeholder in the North Korean economy,” Pinkston says.

What are the drawbacks to the relationship?
Pyongyang is not an ally Beijing can count on. Kim Jung-Il’s foreign policy is, like its leader, highly unpredictable. “North Korea is extremely difficult to deal with, even as an ally,” says Daniel Sneider, the associate director for research at Stanford’s Asia-Pacific Research Center and a former longtime foreign correspondent specializing in Asia. “This is not a warm and fuzzy relationship,” he says. “North Korean officials look for reasons to defy Beijing.” Some experts say the missile tests were just one example of North Korea pushing back against China’s influence. “”It was certainly a sign of independence [and] a willingness to send a message to China as well as everyone else,” Segal says. The Chinese, who favor “quiet diplomacy” with North Korea instead of public statements, took the unusual step of making public the fact that Wen Jiabao, the Chinese premier, warned North Korea not to launch their missiles. The fact that Pyongyang did anyway has hurt China’s image, other experts say.

What kind of leverage does Beijing have over Pyongyang?
Not as much as outsiders think, experts say. Beijing has bullied or bribed Pyongyang officials to get them to the negotiating table at the Six-Party Talks many times. “It’s clear that the Chinese have enormous leverage on North Korea in many respects,” Sneider says. “But can China actually try to exercise that influence without destabilizing the regime? Probably not.” Pinkston says that for all his country’s growing economic ties with China, Kim still makes up his own mind: “At the end of the day, China has little influence over the military decisions.”

What are China’s goals for its engagement with North Korea?
“For the Chinese, stability and the avoidance of war are the top priorities,” Sneider says. “From that point of view, the North Koreans are a huge problem for them, because Pyongyang could trigger a war on its own.” Stability is a huge worry for Beijing because of the specter of hundreds of thousands of North Korean refugees flooding into China. “The Chinese are most concerned about the collapse of North Korea leading to chaos on the border,” Segal says.

If North Korea does provoke a war with the United States, China and South Korea would bear the brunt of any military confrontation on the Korean peninsula. Yet both those countries have been hesitant about pushing Pyongyang too hard, for fear of making Kim’s regime collapse. “They’re willing to live with a degree of ambiguity over North Korea’s military capability,” Sneider says, as long as Pyongyang doesn’t cross the “red line” of nuclear testing. Even then, “the Chinese can live with a nuclear North Korea, because they see the weapon as a deterrent against the United States, not them,” agrees Segal. But North Korea’s military moves could start an arms race in Northeast Asia and are already strengthening militarism in Japan, which could push for its own nuclear weapons if North Korea officially goes nuclear.

How does Washington factor into the relationship?
The United States has pushed North Korea to verifiably and irreversibly give up its uranium enrichment activities before Washington will agree to bilateral talks. Experts say Washington and Beijing have very different views on the issue. “Washington believes in using pressure to influence North Korea to change its behavior, while Chinese diplomats and scholars have a much more negative view of sanctions and pressure tactics,” Pinkston says. “They tend to see public measures as humiliating and counterproductive.” Since U.S. officials have repeatedly refused North Korean invitations to establish bilateral talks, “the Chinese have some sympathy for the North Korean view that the United States is not interested in negotiating,” Segal says.

Pinkston says the adversarial Pyongyang-Washington ties will likely not improve. “I don’t think the relationship with the Bush administration is reparable,” he says. “It’s a complete disaster, and someone else has to pick up the pieces. We can only hope it doesn’t degenerate more, but that the status quo will be maintained” until a new U.S. administration takes over, he says. In the meantime, U.S. pundits and lawmakers who push China to take what it sees as destabilizing actions in its region—i.e. support punitive actions or sanctions against North Korea—”are living in a different world,” Pinkston says.

“There’s always been a difference between how the Chinese felt we should approach these negotiations and how the Bush administration felt about it,” Sneider says. “That tension has always been there, and both governments have gone out of their way to obscure that gap because they’re well aware that the North Koreans are good at exploiting those differences.”

What is likely to happen to the China-North Korea relationship?
Despite the tensions caused by the recent missile tests, the relationship will likely continue to be close. Each side has too much invested in the other to drastically change the situation, experts say. If North Korea continues to test missiles, it’s possible that China will react more strongly than it has in the past. Most of the nations involved in the crisis will try to bring North Korea back to the Six-Party Talks. But after that, it is unclear what happens next. “Everyone who deals with North Korea recognizes them as a very unstable actor,” Sneider says.

However, some experts say North Korea is acting assertively both in its relationship with China and on the larger world stage. “The North Koreans are developing a much more realist approach to their foreign policy,” Pinkston says. “They’re saying imbalances of power are dangerous and the United States has too much power—so by increasing their own power they’re helping to balance out world stability. It’s neo-realism straight out of an International Relations textbook.”

The China-North Korea Relationship
Esther Pan, Staff Writer

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Posted in China, Japan, Military, Political economy, South Korea, USA | Comments Closed

Korea Advertising Company

Monday, July 10th, 2006

KCNA
7/10/2006

The Korea Advertising Company is doing well the famous commodity and trade advertising service. The company sponsored a commodity and trade advertising exhibition on the sidelines of the 9th Pyongyang Spring International Trade Fair held in May, thus contributing to deepening the friendly and cooperative relations among nations and to realizing many-sided intercourse, cooperation and trade transactions.

The company, which is doing commodity and trade advertising activities in a uniform way, makes and sets up advertising mediums of various forms and contents in streets, stadiums and international exhibitions and extensively advertising them through newspapers, TV and internet at the request of local and foreign industrial establishments and companies.

It also holds the exhibitions for introducing export goods, trade business and investment environment at home and abroad.

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Russia secretly offered North Korea nuclear technology

Sunday, July 9th, 2006

From the Daily Telegraph, via NKZone:

Russia is facing criticism after secretly offering to sell North Korea technology that could help the rogue state to protect its nuclear stockpiles and safeguard weapons secrets from international scrutiny.

Russian officials touted the equipment at an IT exhibition in Pyongyang a fortnight ago – just days before the Communist state caused international alarm by launching a salvo of short and long-range missiles into the Sea of Japan.

In what appear to have been unguarded comments, Aleksei Grigoriev, the deputy director of Russia’s Federal Information Technologies Agency, told a reporter that North Korea planned to buy equipment for the safe storage and transportation of nuclear materials, developed by a Russian government-controlled defence company.

The company, Atlas, also received interest from the North Koreans in their security systems and encryption technology – which were kept from display at the exhibition for security reasons.

In remarks made to the Russian Itar-Tass news agency – hastily retracted after publication – Mr Grigoriev said that the main aim of the June 28 exhibition was “establishing contacts with the Korean side and discussing future co-operation”. Last week Russia, along with China, opposed a draft UN Security Council resolution, proposed by Japan and backed by America, that would bar missile-related financial and technology transactions with North Korea because of the missile tests.

As tensions over the missile tests mounted, the US government yesterday deployed its USS Mustin, equipped with so-called Aegis missile-tracking technology that is geared towards tracking and shooting down enemy missiles, to Yokosuka, home port to the US Navy’s 7th Fleet.

On Friday, George W Bush called for the issue of the missile tests to be put before the Security Council. He said he wanted to make clear to Kim Jong Il, the North Korean leader, “with more than one voice” that the rest of the world condemned Wednesday’s launches.

Sources close to the proposed sale of the equipment – which would have civil and military uses – said that it was evidence of Russia’s secret support for its Soviet-era ally, which was once a bulwark against Chinese influence in the Far East. It was reported that the North Korean military interest in the exhibition stemmed from the dual purpose of many of the products and technologies on display.

After the show, which led to plans for further meetings between the Russian and North Korean delegations, Mr Grigoriev said Pyongyang’s primary interest in buying the equipment was to combat the “threat posed by international terrorism”. However, the Russian embassy in Pyongyang immediately denied the report, claiming that it was “disinformation”. Mr Grigoriev subsequently denied ever having spoken to the journalist concerned.

Disclosures of a possible deal are at odds with official Russian policy towards North Korea’s nuclear programme. On June 22, North Korea’s ambassador to Russia, Park Yi Joon, was summoned to the foreign ministry in Moscow and informed that -Russia “strongly objects to any actions that can negatively influence regional stability and worsen nuclear crisis on the Korean Peninsula”.

There was also some anger domestically at Russia’s opposition to the UN sanctions resolution. Although the Russian foreign ministry expressed anger that Moscow had not been notified of the launches, it went no further than issuing an anodyne statement expressing concern that the tests endangered Pacific Ocean shipping and “violated the commonly accepted world practice of giving a warning”.

Western experts were not surprised that the two countries might be discussing sensitive military deals.

Nicholas Eberstadt, a North Korea expert at the American Enterprise Institute, a think tank in Washington, said that Russian policy towards North Korea had long been influenced by the desire to restore its Cold War-era influence.

“Russia often seems more ambitious to restore that influence than to play a positive role in international affairs,” he said. “We’ve got no reason to doubt that Moscow is playing a double game with North Korea. It’s not entirely surprising considering Vladimir Putin himself came up with the harebrained suggestion some years ago that Moscow, as a protector and provider for the North Korean regime, launch a North Korean satellite.”

Mr Eberstadt suggested that any controversial business deals would be politically costly for the Kremlin. “If Moscow wishes to be on the record as the sole defender and apologist for the world’s remaining revisionist and nuclear-proliferating regimes, then it would be interesting to see how its European friends would react.”

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ROK suspends aid until missle issue resolved

Saturday, July 8th, 2006

From the Joong Ang Daily:

Flows of aid to stop until crisis abates
South willing to meet North only on missiles, weapons
July 08, 2006

A senior government official said that Seoul would withhold promised aid to the North until the missile crisis is over. That decision did not include a delay in the provision of the last promised fertilizer shipment to North Korea, however; a ship left port yesterday bound for North Korea with the last 20,000 tons of that assistance.

Although the Unification Ministry said that it would not cancel the ministerial talks, which are to be held in Busan from Tuesday through Friday, there is no guarantee that they will actually be held. A former senior ministry official noted that Pyongyang could well boycott the talks themselves in a tit-for-tat response to Seoul’s rejection of working-level military talks it proposed two days before it launched seven missiles on Wednesday. In response to those launches, Korean conservatives have also publicly burned the North Korean flag, another sore point with Pyongyang.

The additional promised 100,000 tons of fertilizer and 500,000 tons of rice aid would not be sent to the North. “We made public what we want to address at this meeting so that the North will hear it,” he said. Echoing the former official’s comments, he added, “It is difficult to say whether the North will actually come.”

While Seoul was pondering how to respond to the missile launches, Pyongyang warned against retaliatory sanctions. Kyodo News Agency reported yesterday that Song Il-ho, the North’s representative for normalization talks with Japan, demanded that Japanese sanctions imposed after the missile tests be lifted. From Yonhap:

North Korea warned on Saturday that Japan could face “stronger physical measures” after it banned a Pyongyang ferry from entering its ports for six months in response to the communist state test-firing seven missiles last week.

Song Il-ho, North Korea’s ambassador in charge of normalizing diplomatic ties with Japan, told a pro-Pyongyang newspaper in Japan that, “If anyone tries to put us under pressure, we will have no choice but to take stronger physical measures.”

Regarding the sudden ban on the North Korean ferry Mangyeongbong 92, he said, “Such (an) anti-humanitarian measure is causing a significant anti-Japanese sentiment among our people,” Song was quoted as saying by the Chosun Sinbo.

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Missle test could affect ROK aid to DPRK

Thursday, July 6th, 2006

From Joong Ang Daily:

One ROK official said yesterday that shipments of 100,000 tons of fertilizer and 500,000 tons of rice, the remainder of assistance promised this year, would be suspended at least temporarily.

“There should be no misunderstanding on this,” the official said. “We told the North that actions would be taken if they fired a missile.”

Other projects, such as manufacturing at the Kaesong Industrial Complex and tours to the resort area of Mount Kumgang, will probably not be touched. Mr. Lee, the Unification Minister, said the two projects had long-term goals and involved private capital, and so were not appropriate instruments of retaliation.

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Missle prompts Japan to tighten trade with DPRK

Thursday, July 6th, 2006

Washington Post
Colum Lynch and Anthony Faiola
7/06/06

Japan imposed limited economic sanctions on the North, including a measure prohibiting its officials, ship crews and chartered flights from entering Japan.

A draft U.N. resolution, formally introduced by Japan, would also require states to prevent the transfer of money, material or technology that could “contribute” to Pyongyang’s ballistic missile program or advance its capacity to develop nuclear explosives or other weapons of mass destruction.

In addition, Japanese officials indicated they might be prepared to halt millions of dollars in remittances that are sent annually to North Korea from Koreans living in Japan.

As for China’s response:

Several observers warned that even if Beijing agreed to some form of censure, it would remain reluctant to impose tough economic sanctions out of fear that such measures could destabilize North Korea and spark a crisis on their shared border.

“I don’t think China will take at this moment stronger political or economic action against North Korea,” said Chu Shulong, a political science professor at Tsinghua University and expert in international security. “We Chinese believe basically, fundamentally it is not our problem, the missile launch problem. It’s a problem between North Korea and the U.S., it’s a problem between the DPRK and Japan, it might be a problem between North Korea and South Korea. But basically it’s not a China problem.”

North Korea experts said the options for the Bush administration remain limited, particularly if the Chinese and South Koreans were reluctant to impose tough economic sanctions. Instead, many said, it was more likely that Japan and the United States would seek to continue isolating North Korea by slowly tightening economic sanctions.

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